Attorney E-Newsletter

June 2009

US Supreme Court Addresses Ethics

The United States Supreme Court does not often render decisions that affect
attorney and judicial ethics, but two actions in the last month hold the potential
to affect the actions of judges and lawyers.

In the majority opinion by
Justice Kennedy in the case of Caperton v. A. T. Massey Coal Co., No.
08–22 (June 8, 2009), the court held that due process required a judge
who had accepted large campaign contributions from the CEO of one of the litigants
to recuse himself from the proceedings on the grounds that “the probability
of actual bias on the part of the judge or decisionmaker is too high to be
constitutionally tolerable.” The opinion stressed that this is not a
general rule, but that the circumstances were exceptional. The CEO had contributed
over $3 million[1] to the judge’s campaign and various
causes he supported, before the judge cast two critical deciding votes in favor
of the CEO’s company. Chief Justice Roberts wrote a dissenting opinion,
joined by three justices, contending that the ruling "will inevitably
lead to an increase in allegations that judges are biased, however groundless
those charges may be. The end result will do far more to erode public confidence
in judicial impartiality than an isolated failure to recuse in a particular
case." Justice Scalia also wrote a dissenting opinion.

On the same day, the Court granted certiorari in a case that may affect the
actions of lawyers even more directly. In the case of United States v.
Milavetz, Gallop & Milavetz, 541 F.3d 785 (8th Cir.,
2008), the Court agreed to review a decision of a divided panel of the 8th
U.S. Circuit Court of Appeals which invalidated a section of the Bankruptcy
Abuse Prevention and Consumer Protection Act that prohibits “debt relief
agencies”— including attorneys — from advising clients to
incur more debt in contemplation of filing bankruptcy. The Eighth Circuit panel
held that the statute was overly broad, and violated the First Amendment by
prohibiting attorneys from giving clients appropriate and beneficial advice
as to their rights under the law. The ABA Journal has an extensive discussion
of the Eighth Circuit decision here.

If Ya Gotta Go . . .

Since the April announcement of changes to Rule 219, Pennsylvania Rules of
Disciplinary Enforcement, which requires inactive
attorneys to pay an annual inactive fee, we have had a number of inquiries
from attorneys currently on inactive status as to their options.

Inactive attorneys who do not intend to practice in Pennsylvania again may
avoid the assessment of the inactive fee by electing retired status. Rule 219(i)
states:

An attorney who has retired shall file with the Attorney Registration Office
an application for retirement. Upon the transmission of such application
from the Attorney Registration Office to the Supreme Court, the Court shall
enter an order transferring the attorney to retired status, and the attorney
shall no longer be eligible to practice. The retired attorney will be relieved
from the payment of the fee imposed by this rule upon active practitioners
and Enforcement Rule 217 (relating to formerly admitted attorneys) shall
not be applicable to the formerly admitted attorney.

An attorney may opt for retired status, even though she or he continues to
practice law or engage in legal employment under the authority of admission
to another bar. If the retired attorney decides to return to active status
in Pennsylvania within three years of electing retired status[2], she or he may be reinstated
in the same manner as an inactive attorney, except that the retired attorney
must pay the annual active fee for the three most recent years, or such shorter
period in which the attorney was on retired status, while an inactive attorney
seeking reinstatement must only pay the current year’s fee, plus certain
arrears if applicable.

In response to some of your inquiries,[3] retiring or resigning from the bar will
not mean you will no longer receive this informative and entertaining newsletter.
Consider it a legacy benefit.[4]

Lawyer Scam Update

We have reported several times on the proliferation of increasingly sophisticated
scams aimed at lawyers, often appearing to be clients presenting legitimate
cases on behalf of and against entities which check out as genuine.

The ABA
Journal reports that a Nashville, Tennessee firm was the victim of an
intricately designed scam that fooled the firm into transferring $400,000
to an Asian bank account.

Seek and Ye Shall Find . . . Most of the Time

During the month of June, we experienced a series of problems with the Disciplinary
Board Web site, www.padb.us, which resulted
in certain functions, such as the attorney database, failing to call up the
information it was designed to provide.[5] Most of the functions have been restored
as of the time this newsletter is going to press, and the remainder should
be back in action by the time this reaches you. We apologize for any inconvenience.[6]

FAQ: IOLTA and Insurance

Q: I am setting up my own law office. I understand that I need to have an
IOLTA account and malpractice insurance. Where can I find the requirements
for these?

A: A lawyer is only required to have an IOLTA (interest on lawyer trust accounts)
account if he or she handles certain kinds of client funds, defined as “Funds
which are nominal in amount or are reasonably expected to be held for such
a short period of time that sufficient income will not be generated to justify
the expense of administering a segregated account.” [RPC
1.15(a)(9)] If you do not have funds such as this, you will not need an
IOLTA account. If you do need to have such an account, the rules regarding
IOLTA accounts and a helpful FAQ provided by the Pennsylvania IOLTA Board may
be found here.

As for malpractice insurance, there is no requirement in the Pennsylvania
rules that a lawyer carry professional liability insurance. However, a lawyer
in private practice who does not have professional liability insurance in the
amounts of at least $100,000 per occurrence and $300,000 in the aggregate per
year must inform clients in writing of this fact, and keep copies of that notice
for six years after the termination of the representation. RPC
1.4(c).

Got a Tip?

[1] This
was more than what was contributed by all of the judge’s other contributors
combined, and three times the amount spent by the judge’s own committee.
One would tend to remember such generosity.